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Stephen Schwarzman, chairman, chief executive and co-founder of Blackstone Group, said the firm is in a “mega cycle” as underfunded public pension plans are forced to increase allocations to alternative assets.

Schwarzman said on his firm's third-quarter results call yesterday: “Pension funds face a funding shortfall which puts us in a mega cycle as Blackstone stands out with significant experience in managing illiquid asset classes. The reason we have been able to raise more money than our peers is because of our record of good returns.”

The chief executive said that in the third quarter alone the private equity giant had inflows of $10bn, taking total inflows in the last 12 months to $38bn, excluding acquisitions.

He said: “These are really big numbers and have taken us to record total assets under management of $205bn which is up 30% year-over-year. That is pretty stunning.”

One example Schwarzman gave in fundraising was the closing of Blackstone’s seventh global real estate fund at $13.3bn in the third quarter. He said: ‘We are uniquely positioned with the largest capital pool in world. Since the fourth quarter of 2009, we have invested $17.6bn across our real estate funds and have high return expectations.”

He said that as a firm Blackstone had made a judgement nine months ago that the US housing market had reached a bottom and this judgement was used across all of its businesses.

This year Blackstone’s real estate funds have bought $1bn worth of individual houses at around $150,000 each, which take an average 26 days to rent once they come on the market.

Schwarzman said: “This is a very difficult strategy for anyone else as you need to to set up infrastructure to get control of a house, fix it up and find renters which needs experts all over country. We are moving across US and buying about $100m worth of houses every week.”

As a result of its call on housing, Blackstone’s credit unit GSO is financing home builders, its distressed loans unit is buying non-performing property loans and the firm is investing in mortgage-related securities.

Schwarzman said: “Once in a while there is a market-turning trend and we are loading the boat which is turning out be a very wise thing.”

Another growth opportunity is the energy sector which, Schwarzman said, needs more capital than the world can provide. In the third quarter, Blackstone's first dedicated energy fund completed fundraising with $2.4bn of total commitments.

He said: “Our first private equity energy fund has invested 40% of its capital in seven months and is already marked at 1.6 times investors’ money which is outstanding.”

Tony James, president and chief operating officer, said Blackstone could continue to grow assets at a double digit rate even without making acquisitions.

James: “Out of necessity big institutions are shifting to alternatives and we have been, and expect to, pick up market share. In addition, retail investors represent less than 1% of our industry.”

He said that Blackstone’s most recent global private equity, BCP VI, has the highest return out of all of its buyout funds so far.

In May, Blackstone used BCP VI to buy stock in oil and gas firm Cheniere Energy Partners which has already increased in value and has already made gains from taking part in the rescue of broker Knight Capital in May.

James said: “Our policy is to carry investments at cost in the first year unless there is a public transaction like an IPO or acquisition. As we do not change our marks, all our sales are at a significant upside to where they are marked.”